Apollo XIII

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Business and the Natural Environment

• ENV 188A
• Magali Delmas

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Class 1 Introduction

• Introductions
• Papers discussion (Reinhardt)
• Subjects that will be covered in the class
• Administrative matters
• Rules of the fishbanks game

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PORTER 1995Fixed trade-off Ecology versus the
economy?

• Industrys private costs for prevention and
  cleanup
• costs that lead to higher prices and reduced
  competitiveness
• This is a static view of environmental regulation
  were everything except regulation is held
  constant
• i.e. technology, products, processes and customer
  needs are fixed

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A world of dynamic competition

• Companies operate in a world of dynamic
  competition not in the static world of much
  economic theory
• Firms constantly find innovative solutions to
  pressures of all sorts from competitors,
  regulators and customers
• Environmental management offers opportunities to
  innovate, differentiate products, reduce costs,
  or otherwise enhance the profitability of
  operations

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Environmental innovationcan pay

• General Electric - Ecomagination Program
• Replaced existing lighting with high-efficiency
  lighting - Reduce its indirect GHG emissions by
  18,000 metric tons per year, providing expected
  savings of 2 million annually
• 3M Company - Brookings Environmental Performance
  Commitment
• Implemented product changes to eliminate the use
  of 3.5 million of gallons of water
• See http//www.greenbizleaders.com/

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Is regulation necessary?

• Create pressure that motivates companies
• Improve environmental quality
• Alert and educate companies
• Create demand for environmental improvement
• Level the playing field

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Reinhardt the environment as a business problem
(1997)

• It is important to recognize the conditions under
  which it pays to be green.

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Conditions to reconcile provision of public good
and expected value of the firm (1)

• Possibility for strategic interaction with
  competitors
• Rent seeking (German car manufacturers)
• Collusion (Responsible Care)
• Opportunities to differentiate products
• Bundle public good with private consumption
  benefit (Patagonia)

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Conditions to reconcile provision of public good
and expected value of the firm (2)

• Discovery of unexploited cost savings
• (Interfaces, Xerox product take back)
• Managing environmental risks
• insurance policy sour community relations related
  costs shocks (Exxon)
• Increase productivity
• Recruit and retain high level employees with
  personal environmental convictions

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Topics that will be studied in the course (1)

• I. The context for environmental management
  tragedy of the common and environmental
  regulation
• II. Environmental performance and financial
  performance
• II. Basic Environmental strategies and
  competitive advantage
• environmental differentiation, cost reduction,
  and risk reduction

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Topics that will be studied in the course (2)

• IV. Managing stakeholders
• new types of relationships between firms,
  regulatory agencies, NGOs and communities and
  suppliers
• V. International issues in environmental
  management

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Teaching method

• Case discussion (Patagonia, McDonalds/
  Environmental Defense )
• Lecture discussion
• Speakers (outside of class)
• Group project/Survey

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Grading

• Group Presentation 20 (group presentation on
  case or other material)
• Class Participation 20
• Individual Write-Up 25 (one individual write-up
  on a session of your choice)
• Group Project 35 (report and presentation)
• Be on time and No cell phones please!

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Group presentation

• GROUP assignment Most weeks 5 slide powerpoint
  presentation due (analyzis of case, response to
  questions etc)
• GROUP presentation Each week 1 group presents to
  the class their recommendations
• The other groups challenge the group with
  questions

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Case studies

• Cases about actual companies to practice
  strategic analysis and gain experience in
  crafting strategy (Patagonia, Hayward Lumber)
• Diagnose and size up the situation described in
  the case and then recommend appropriate actions
  steps as if you were a manager

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Advantage of cases

• Get valuable practice in identifying strategic
  issues
• Enhance your sense of business judgment as
  opposed to uncritically accept the authoritative
  explanation of the teacher
• Gain exposure to different industries and
  companies and increase your understanding of the
  real situation that managers face

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The discussion

• Dont be obsessed with the answer of the case
• More important is the group discussion of the
  case and the development of good arguments
• Participation and discussion is key

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How to organize a case

• What is the problem?
• Present what you see as the strategic problems
  facing the firm or industry. Assess strengths,
  weaknesses, opportunities and threats.
• What are the different possible strategies?
• Evaluate available alternatives
• What is the solution that you would propose and
  why?
• Make strategic recommendations

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How to prepare a case as a group

• Read the reading assigned for the class and
  read the case once
• Read the case a second time studying exhibits and
  decide what strategic issues are
• Use whichever tools and techniques of business
  environmental analysis that are called for. Look
  for opportunities to apply the concepts and
  analytical tools in the reader.
• Discuss conflicting opinions in your group and
  support your diagnosis and opinion with evidence
• Develop and appropriate action plan and set of
  recommendations

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Good Slides

• Use PowerPoint
• Use BIG FONT (i.e. Book Antiqua 32)
• Draw graphs
• Assignment 5 slides max

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Individual Write-Up

• 1 write-up for the entire quarter
• Analyze case briefly.
• Write the report as a recommendation for the CEO
  for the company
• Max 2 pages

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Group project Strategy of an NGO or Corporation
related to coffee eco-certification.

• Select company or organization of your choice
• Analyze firm its strategy related to
  eco-certification using the concepts learned in
  class
• Suggest improvement be creative!
• Information sources organization and consumer
  survey
• Example of potential organizations are Starbucks,
  Rainforest Alliance, Smithonian Institute, Coffee
  Bean etc.

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The Survey

• Survey about awareness and understanding of
  coffee eco-label
• Survey Monkey survey
• Each of you sends out the survey to 100 people by
  email
• Each group analyzes the data independently

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Timing

• By January24 1 page summary of project
  including
• the name of the organization you will be
  researching, your group members and description
  of your objectives
• UCLA Survey training online
• Deadline of written final report March 10
• Presentation of the report on March 13 (last
  class)

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Groups

• By the end of the session, please provide the
  name of the people in your group (5 people per
  group)

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Next session Fishbanks

• Read the Fishbanks rules carefully and prepare
  your strategy for the game
• Fishbanks game